A large jump in China's consumer prices dragged on global stocks Friday, while European markets continued to wrestle with rising oil prices in an otherwise quiet trading day.
China's consumer price index rose 4.4 percent in May from a year ago, the 18th straight monthly rise, spurred by rising food prices. And as China's economy continues to grow rapidly, investors felt the government may have to step in with major interest rate hikes. The government has signaled it is ready to manage the economy with a strong hand as needed.
The news sent Hong Kong's Hang Seng index down 26.48, or 0.2 percent, to 12396.39.
Other Asian markets also reacted negatively. Tokyo's Nikkei 225 index fell 49.15, or 0.4 percent, to 11526.82, while Seoul's Kospi index dropped 30.77, or 3.9 percent, to 751.53.
In Europe, trading was quiet as the U.S. markets were closed due to the national day of mourning for former President Reagan. With little economic news to move the markets, the European indexes remained.
Britain's FTSE 100 gained 4.60, or 0.1 percent, to 4490.70 despite concern over another rise in oil prices. British airline stocks were heavily sold on fears that higher fuel prices would cut into profits. Overall volume on the London market was very light.
"It is thin which is hardly surprising," said Rolf Elgeti, a strategist at Commerz Bank. "It is quite normal if you do not get direction form the U.S., as nobody wants to take any big bets especially before the weekend."
In other European markets, Paris' CAC-40 slipped 5.96, or 0.2 percent, to 3705.42, while Frankfurt's Xetra DAX dropped 3.30, or 0.1 percent, to 4018.34. Trading throughout the European Union was light in advance of the euro zone's consumer price index data, due out Wednesday.
The European economic recovery, while lagging slightly behind the U.S., has been strong recently, leading some investors to consider the possibility of inflation there.
In Latin American markets, Mexico's IPC index fell 8.41, or 0.1 percent, to 10,222.09. The major indexes in Venezuela and Chile were both down 0.2 percent, while stocks in Argentina were up 0.3 percent and up 0.4 percent in Brazil.
In currency trading, the U.S. dollar rallied to two-week highs against the euro, the Swiss franc and British pound, buoyed by recent comments from the Federal Reserve on its commitment to battle inflation.
The euro fell 1.02 cents to $1.2004 in early trading in New York, while the pound was down 2.04 cents at $1.8219. Against the Swiss franc, the dollar was at CHF1.2589, above Thursday's CHF1.2449.
The dollar also rose against the yen, at Y110.03 versus Y109.26 late Thursday.